An epic battle over the California high-speed rail project ended with a nail-biter on July 6, when the state senate got exactly the 21 votes needed to move ahead with funding the first segment of the project. The California Assembly had already passed the bill authorizing $2.6 billion in state bonds for the first segment, and Governor Brown’s signature is assured. [Update: Governor Brown signed the bill on July 18.] “Californians have always embraced bold visions and delivered public projects that chart the way for the rest of the nation,” said U.S. Transportation Secretary Ray LaHood. “Today’s vote continues that tradition.”

Media reports have made out the construction of high-speed rail as either a panacea for all of our woes or the beginning of Armageddon. But the final outcome is still to be written — not just whether high-speed rail is fully built and achieves projected ridership but whether it fulfills its potential to shape future growth, transform transportation in California and rebuild cities as the centers of our economy.

This project has incredible potential, but many issues will shape its viability over the next two years.

After Years of Ups and Downs, Strengthened Project Gets on Track

The California High-Speed Rail Authority (CHSRA) was created in 1996 but has been chronically understaffed and much maligned. Ballot initiatives for initial funding of the LA/Anaheim to San Francisco segment were taken off the ballot in 2004 and 2006.

Environmental advocates helped influence and improve the project design — adding everything from a commitment to pursue zero energy to strong land use guidelines and protection of sensitive land — and it received significant support from statewide groups when it finally appeared on the ballot in 2008. Voters approved Proposition 1A in November 2008, authorizing nearly $10 billion in state bond funds toward the project.

But as the project was further designed, costs spiraled to $98 billion — more than double what had been projected when Prop 1A passed. Its dedicated tracks also required excessive infrastructure through several downtowns, and community opposition grew.

Yet Governor Brown made the project one of his top priorities and appointed new leadership to buoy the struggling project. In April, Dan Richard, the CHSRA’s new chair, helped usher in a revised 2012 Business Plan. The new plan reduced community impacts by sharing tracks with existing rail services in the urban areas (known as the “blended approach”). Along with other changes, it brought the projected cost down to $68 billion.

Most importantly, the project is now designed to serve as the backbone of a statewide rail network rather than as an isolated system. It supports early upgrades to Caltrain and Metrolink, as well as lines now used by Amtrak and Altamont Commuter Express (ACE), allowing these systems to go faster and attract more riders. With an additional $2 billion of funding for these projects included in the bill that passed July 6, millions of Californians will benefit from these first investments by 2018. These upgrades will also serve to ready those corridors for high-speed rail.

If all goes well, construction will begin in 2013. The bill’s $2.6 billion in state funds will match more than $3 billion in federal funds for the section of track from Madera to Bakersfield. The CHSRA plans for a unified Northern California service that will allow Amtrak, ACE and other operators to use the first segment before high-speed service begins.

Project's Real Challenges Will Come in the Next Two Years

The July 6 vote was monumental, but it will pale in comparison to the task of actually completing the system: Picture an inexperienced climber struggling to scale El Capitan, getting 300 feet up and then realizing there is 2,700 feet to go. That is almost exactly where we are in this process.

The most daunting challenge of all will be identifying the rest of the funding. At least $56 billion more is needed to complete the project over the next 20 years. But every journey starts with a first step. Right now this project needs to build this first segment on budget and on time (especially on time, to meet federal stimulus deadlines of Sept 30, 2017) and show that it is being well managed.

The CHSRA recently hired Jeff Morales, a former Caltrans director who most recently had been leading the planning for high-speed rail as a consultant. This was an excellent choice and restored the confidence of stakeholders and legislators, but he can’t do it alone. In fact the funding bill requires that he fill several top-level positions by October 2012 or risk further delays. The culture, competency and sensitivity of the CHSRA will be under intense scrutiny, especially as it begins construction that will impact cities and farms in the Central Valley.

Changes to Environmental Review May Come Up Again

With the federal deadline to spend funds by September 2017, the Brown Administration floated the idea of three modifications to the California Environmental Quality Act (CEQA) to reduce delays to the project from litigation. The administration wanted these provisions tied to the funding bill, but with a strong reaction from the environmental community — including a letter from the Sierra Club categorically opposed to any CEQA changes — the concept was swept under the rug so that the funding could be debated on its own.

Many believe similar proposals will be back soon. TransForm, along with some of the largest environmental groups, has expressed openness to some very basic modifications, including allowing the CHSRA to make a change in one segment, such as along the Caltrain line, without having to redo the analysis for the entire project. This stance acknowledges that high-speed rail is an environmentally preferable alternative to increased highway and airport capacity, and that having to constantly reevaluate whether it is a superior alternative at the program scale just doesn’t make sense. It is, however, absolutely critical to require that impacts and mitigations are identified at the project (i.e., local) level. TransForm and other groups are united against the weakening of CEQA at the project level. (For more information see page 35 of Transform’s report.)

Additional Funding Sources Will Be Challenging

It won’t be long before the CHSRA is searching for the next source of funds. The second phase of the project is the segment from Bakersfield to the Los Angeles Basin, with a cost of $25 billion. The revised business plan anticipates $20 billion from federal sources, but none of that federal funding is likely to materialize unless the House of Representatives changes hands this fall and Democrats hold the White House and Senate.

If federal funds don’t materialize, the Brown Administration has proposed using revenues from the auction of permits in the Assembly Bill 32 greenhouse gas cap-and-trade program as a backstop. These revenues will be modest through 2015, but at that time transportation fuels will come under the cap, which means revenues could rise to $7 billion or more annually. There will be a host of legal and political hurdles to get any of these funds, let alone $20 billion. The most basic is to prove that the project would actually reduce greenhouse gasses cost effectively, a question that will be tackled by the CHSRA within a year. Many of these hurdles are explained in a report by the Legislative Analyst’s office.

Even if it is legally viable, funding for high-speed rail would compete with dozens of other proposed uses, including a widely circulated proposal from TransForm and Housing California to put at least 30 percent of the funding toward local transit, bicycle and pedestrian infrastructure, as well as affordable homes near transit.

Ultimately, high-speed rail can’t just be a transportation project. The development of a high-speed train linking California's major cities to each other must help retain existing downtowns as the primary economic centers of California. But unfortunately, good land use does not automatically follow new transit.

The CHSRA has already made what is arguably the most critical land use decision by focusing new stations primarily in downtowns at existing transit hubs. Although it can cost more to go through city centers in areas like the Central Valley, the CHSRA made a policy decision to avoid locating stations in greenfields.

But that is not enough. TransForm helped the CHSRA develop strong, smart land use guidelines in 2007, and the authority now has a funding program to support community-based planning near future stations. This will be especially critical in the Central Valley, and the timing is perfectly aligned with regional-scale planning for the state-mandated Sustainable Communities Strategies that are just getting underway there and will be adopted in December 2013.

The CHSRA must keep committing funds to station-area planning, but there must also be a concerted effort to coordinate other state grants to maximize potential benefits and avoid displacement of residents and businesses by high-speed trains. There are significant potential benefits if we get the land use right in the Central Valley; for a preview see page 25 of TransForm’s report.

Impacted and Disadvantaged Communities Must Be Engaged

The construction of high-speed rail will directly displace some residents and businesses. While the CHSRA is required to compensate landowners for the value of their property, that does not mean their lives will not be dramatically disrupted. The authority has identified a host of potential mitigation measures but, as pointed out by groups like California Rural Legal Assistance Inc., the most important ones are only “suggested or considered.”

Deep engagement of disadvantaged communities needs to start immediately, and the CHSRA should prioritize policies that go beyond compensation: for example, ensuring that low-income residents who are displaced by the construction of this project are financially able to remain in their community. TransForm has proposed that the CHSRA immediately establish an Environment and Environmental Justice Advisory Committee, whose chair would make direct reports to the full CHSRA board, to confront this and other key issues in a transparent, constructive process.

Even with Challenges, High-Speed Rail Is an Opportunity We Must Take On

With California projected to grow to 50 million people over the coming decades, we absolutely need new transportation capacity. The question is, What types of capacity will we invest in? Done right, building high-speed rail in California can reinforce cities as the hubs of our economies, significantly reduce greenhouse gas emissions and improve air quality, get commuters off congested roads and cost much less than highway and airport expansion. Yet the CHSRA must truly confront all of these issues — and excel at finding solutions — if this project is to ever get built.

High-speed rail is an incredible opportunity and challenge for California to take on, but an essential one. Over the coming months TransForm, along with SPUR and other allies, will be engaged in making sure that high-speed rail gets done — and done right.